Fiscal discipline was apparently not atop government 2018 New Year’s resolutions.
A lot of citizens in Canada also left it off their lists. Discipline on any front, apparently, is so 20th century.
But fortunately there are some holdouts that still see value in living within their means.
At the Macdonald-Laurier Institute, for example, a former senior adviser to Stephen Harper is beating the drum for a return to fiscal conservatism.
That might not sound like much fun for consumers, but it abides by the philosophy upon which much of the western world’s current good fortune has been built.
Sean Speer notes that the federal government and virtually all provincial governments are now running deficits as debt accumulation at every level has become endemic. The Justin Trudeau regime, he notes, has increased spending 20% in its first three years.
Late last year, the Canadian Federation of Independent Business pointed out in its annual BC Municipal Spending Watch that local government operating spending had exceeded population growth “nearly fourfold between 2005 and 2015.”
Statistics Canada data, meanwhile, found that the household savings rate as a percentage of disposable income in the country had fallen to 2.6% – its lowest level in 10 years – as Canadians added $29 billion in credit market debt in 2017’s third quarter alone, even without any meaningful interest rate increase. The instant gratification nation, consequently, has next to no cushion for financing its retail and other acquisitions.
That’s a worry for the economy now but far more for the economy down the road.
Fiscal conservatism might not be right for all governments or all economic conditions, but unchecked debt accumulation leads to bad outcomes for countries, economies, families and businesses.
The longer fiscal discipline takes a back seat to vote buying and ill-advised indulgence, the more painful the bill will be at the end of a road that’s quickly running out of asphalt.
